The Spike in the Volatility Index Points to Higher Stock Prices
- Posted by Greg Harmon
- on April 21st, 2013
Despite what you might read or hear elsewhere, the equity markets remain in an uptrend. Yes, an uptrend. It may be ending but until signals confirm a move lower, it is an uptrend. And with that in mind consider the signal that the Volatility Index, $VIX, gave last week. It popped right? That means volatility is going higher and stock prices are going to fall. Not so based on recent history. The chart below shows the VIX in the top panel with the S&P 500, $SPX, in the bottom panel. In this long downtrend in the VIX it has had other
spikes higher. In fact the last 3 times it has moved above its 200 day Simple Moving Average (SMA) and then retreated, this has marked a bottom in the S&P 500. The move higher from that bottom has averaged 8.25%. And what happened last week? The VIX crossed the 200 day SMA and then retreated again. If this time marks another bottom then a similar move higher would take the S&P 500 to 1662.50. Interestingly my friend Todd Salamone at Schaeffer’s noticed something similar in a VIX signal last week, but from the other direction. Read his analysis here. Maybe there is something in the water in Ohio or maybe the upward movement is not done yet.
Join the Dragonfly Capital Views Premium Membership
Its Time For a Sale at Dragonfly Capital!
Last Days of the Sale! Ends this weekend! The Annual subscription rate for the Premium Dragonfly Capital Views Service, will be cut by 20% to $600. That is nearly 45% off of the monthly rate for a year! Follow this link to start your subscription, with free 7 day trial, today.
Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through April 2013 Expiry
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Trading Yahoo in a Post Alibaba World
- Premium Earnings 9-16-14
- Another Reason the S&P 500 Could Reach 2500
- The Cup Looks Full on Sally Beauty Holdings
- My Thoughts on A Possible Pullback on the S&P 500 (video)
- Top Trade Ideas for the Week of September 15, 2014: Bonus Idea
- Top Trade Ideas for the Week of September 15, 2014: The Rest
- Top Trade Ideas for the Week of September 15, 2014: The Rest Premium
- Top Trade Ideas for the Week of September 15, 2014: The Best
- SPY Trends and Influencers September 13, 2014